SL seeks US$ 17bn foreign debt relief; urges domestic creditors to contribute

• President says US$ 17bn debt relief sought out of total foreign debt of US$ 41bn
• By the end of 2022, SL’s domestic debt amounted to US$ 42.1bn
• Says proposals for restructuring both foreign and domestic debt will be presented to Cabinet today

President Ranil Wickremesinghe yesterday said foreign creditors are expected contribute US$ 17 billion towards the country’s debt restructuring efforts within a five-year period, and domestic creditors should also make their due contribution towards the debt restructuring.

“What we are requesting from foreign creditors is US$ 17 billion debt relief out of the total foreign debt of US$ 41 billion in the next five years. In the same way, we also need relief from domestic creditors,” President Wickremesinghe said during the inauguration of the Gampaha District Secretariat Administrative Complex, yesterday.

The President highlighted the urgent need to restructure the country’s debt, stating that without such measures, the public debt would exceed 100 percent of the GDP by 2035. Sri Lanka’s total public debt, comprising both domestic and foreign debt, amounted to US$ 83.7 billion by the end of 2022, representing 128.3 percent of the Gross Domestic Product (GDP). 

Of this amount, the foreign debt totalled US$ 41.1 billion, accounting for 63.6 percent of the GDP while the domestic debt amounted to US$ 42.1 billion, which constituted 64.6 percent of the GDP. To ensure debt sustainability in Sri Lanka, the President emphasised the need for restructuring both external and domestic debt. He said proposals for restructuring both foreign and domestic debt will be presented to the Cabinet today (28). Meanwhile, Wickremesinghe assured that the restructuring of domestic debt would have no impact on the membership balance of any public funds, including the Employees’ Provident Fund (EPF). 

He emphasised that the rate of return for superannuation funds will not be affected in any way.
He further stated that the restructuring of domestic debt will not pose any threat to the stability of the country’s banking system, be it public or private banks. 
He specifically mentioned that the deposits of more than 50 million bank depositors will remain unaffected, and there will be no changes to the current interest rates paid on bank deposits.